JOHANNESBURG - South Africa's business confidence index yesterday rose 11 points to 45 in the first quarter - the highest in three years as the market continued to bask in the euphoria that has surrounded President Cyril Ramaphosa's elevation to the highest office in the land.

The Rand Merchant Bank (RMB)/Bureau of Economic Research (BER) Business Confidence Index (BCI) increased from 34 index points in the fourth quarter of last year. Since 1975, the index has risen by 11 points or more on only 15 occasions.

But analysts quickly warned that uncertainty around land expropriation without compensation could stymie the resurgence.

RMB chief economist Ettienne le Roux said the land question needed to be resolved soon, as it could fizzle out the renewed confidence, business capital expenditure and the economy in general.

“This is especially the case as the first quarter confidence jump is driven more by the expectation that the recent (mainly) market-friendly political development would boost activity levels in future than an immediate improvement in the real economy,” Le Roux said.

The BCI also recovered from a seven-year low in the second quarter of 2017. The index, however, still remained below the key neutral level of 50, indicating that 55percent of businesses surveyed still find conditions unsatisfactory.

African Economics analyst Gerrit van Rooyen said while the improved business sentiment was positive, much would be dependent on Ramaphosa's promised reforms.

“Negative developments in terms of mining and land policy could curb enthusiasm for Ramaphosa’s presidency," Van Rooyen said.

Yesterday, Ramaphosa re- iterated that land reform would not come at the expense of damaging the economy or threatening food security.

In answering questions in Parliament, Ramaphosa said: “The property clause in the constitution was never constructed to keep the existing property relations we must review the full extent of our land reform since 1994 and we must not limit ourselves to agricultural land.”

The RMB/BER BCI quarterly study covers a total of 1700 senior executives spanning the five sectors that make up the headline.

The new vehicles dealers sub-index recorded the most improvement, surging 20 points to 52 index points, while both the manufacturing and retail sub-index increased 13points in the period. The building sub-confidence index increased 7points to 41 and the wholesale sub-confidence index crept up 2points to 53.

Annabel Bishop, chief economist at Investec, said the State of the Nation Address and the 2018 Budget boosted confidence and did enough to stave off the immediate threat of a Moody’s downgrade.

“Faster economic growth is likely for South Africa this year compared to 2017. However, confidence is still fragile and the uncertainty surrounding proposed expropriation without compensation will likely have had an impact as it remains unclear exactly what will be expropriated,” Bishop said.

Last week, the South African Chamber of Commerce and Industry said the improvement in business confidence was sustained, with its index reaching 98.9points - 3.4 index points higher than in February 2017.

Goolam Kader of Nedbank Business Banking said Ramaphosa set a tone for the recovery.